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The explanation for line 26 on the 1994 Schedule E instructs
taxpayers to combine lines 24 and 25 and enter the total amount
of rental real estate income or loss on lines 26 and 40 on
Schedule E and on line 17 on Form 1040. Petitioner reported a
$56,954 loss on lines 26 and 40.
The explanation for line 42 on the 1994 Schedule E instructs
real estate professionals to enter the net income or loss they
report anywhere on Form 1040 from all rental real estate
activities in which they materially participate. Petitioner
entered a $56,954 loss on line 42 of his 1994 Schedule E.
b. Petitioner’s Forms 8582 and Supporting Statements
Attached to His 1994 Return
Petitioner attached to his 1994 income tax return two Forms
8582, Passive Activity Loss Limitations. Petitioner added
“ALTERNATIVE MINIMUM TAX” to the top of his second Form 8582. On
the first Form 8582, he reported $1,939 for activities with net
income and $215,860 as prior year unallowed losses, for a net
loss of $213,921. In Part II (special allowance for rental real
estate with active participation) of the first Form 8582, he
reported that his modified adjusted gross income exceeded
$150,000. In Part III (total losses allowed) of both Forms 8582,
he reported $1,939 on line 10 (total income) and line 11 (total
losses allowed from all passive activities for 1994).
Petitioner attached to his 1994 income tax return statements
in support of the Forms 8582. On Statement 29, Form 8582, Active
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Last modified: May 25, 2011